By Daniel Meyer Kickstarter, the crowdfunding investment portal, saw investors pledge over $1 billion in equity capital to more than 140,000 different fundraisers by the end of 2013. The success of Kickstarter and other crowdfunding portals may lead to significant changes in the way real estate development firms and real estate fund sponsors raise funds for the equity tranche of a project’s capital stack – imagine, for example, having the ability to “test the waters” for projects with quick, online capital fundraising efforts before signing on the dotted line for a project’s debt component. The crowdfunding model may also provide investors with unprecedented access to a diverse universe of real estate investments, with only a fraction of the capital commitment needed to participate. Investors and sponsors alike may also be empowered to use crowdfunding to participate in “passion projects” such as historic preservation, open space conservation, and neighborhood-improvement campaigns.
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Daniel Meyer, Esq. is a member of Partridge Snow & Hahn, LLP’s real estate and corporate groups, Providence, R.I.